Hourly chart of the EUR/USD pair
The EUR/USD pair continued to weakly move down on Wednesday night after breaking the upward trend line, as we expected. Last night we recommended novice traders to not close short positions. At the moment, we can state a fact – the MACD indicator turned up, which indicates the pair’s intention to start an upward correction or once again return to the upper line of the 1.17-1.19 sideways channel. One way or another, but now it might be better to close sell orders at a small profit. Moreover, there are quite a lot of important events that could affect the pair’s movement today. Traders can start working with some of them in the morning. That is, we might face a situation where a sufficiently strong movement could begin, which is a “game of anticipation” based on the results of the Federal Reserve meeting. In general, we recommend that you behave extremely carefully in the foreign exchange market today.
On September 16, novice traders can solely focus on the US retail sales report for the entire day, which will be released in the afternoon. According to analysts forecasts, the indicator will grow by 1% in August. Therefore, surpassing this figure may support the US currency. The next important event will have to wait until evening or even night. Basically, our evening review will come out before the final event of the day. We are talking about the Federal Reserve meeting, summing up its results, the publication of economic forecasts and a cover letter from the US central bank, as well as a press conference by Chairman Jerome Powell. As we mentioned earlier, you should pay more attention to Powell’s speech, since the Fed is unlikely to change the parameters of monetary policy. A lot will depend on what Powell says. He can argue that the economy is recovering normally and does not need additional stimulus. Or he may argue that recovery is extremely slow, and additional stimulus is necessary. In the first case, the dollar will receive support from the foreign exchange market; in the second, it will most likely resume its decline. In general, the more pessimistic the Fed chairman is, the more chances that the pair’s quotes will return to 1.1900 and, possibly, even overcome this level.
Possible scenarios for September 16:
1) Novice traders are still not recommended to buy the pair at this time, since the price continues to be in the upper area of the sideways channel, where it is more logical to sell the pair than to buy it. Also, the price rebounded off the 1.1903 level, which is the upper line of the side channel, so there is a high probability that the downward movement will continue. Nevertheless, if the 1.19 level is overcome, then it will be possible to consider new longs on the pair and you can count on forming an upward trend while aiming for 1.1924, 1.1947 and 1.2011.
2) Selling still looks more attractive, only because traders have not managed to overcome the 1.1903 level. However, the downward trend is not currently expressed by any technical patterns (trend lines, channels, etc.). We only have a signal to overcome the upward trend line, but at this time an upward correction could begin, as the MACD indicator moved to the upside. Thus, we recommend opening new short positions after completing this correction with the targets at 1.1823 and 1.1800.
On the chart:
Support and Resistance Levels are the Levels that serve as targets when buying or selling the pair. You can place Take Profit near these levels.
Red lines are the channels or trend lines that display the current trend and show in which direction it is better to trade now.
Up/down arrows show where you should sell or buy after reaching or breaking through particular levels.
The MACD indicator (10,20,3) consists of a histogram and a signal line. When they cross, this is a signal to enter the market. It is recommended to use this indicator in combination with trend lines (channels and trend lines).
Important announcements and economic reports that you can always find in the news calendar can seriously influence the trajectory of a currency pair. Therefore, at the time of their release, we recommended trading as carefully as possible or exit the market in order to avoid a sharp price reversal.
Beginners on Forex should remember that not every single trade has to be profitable. The development of a clear strategy and money management are the key to success in trading over a long period of time.
The material has been provided by InstaForex Company – www.instaforex.com